Vivus Shares Rally on Hopes Obesity Drug Will Gain Approval Next Year

Vivus (VVUS) shares are soaring more than 25% in Friday trading after the company gave investors hope its diet pill, Qnexa, could be approved next year, even though the U.S. Food and Drug Administration rejected the obesity drug yesterday. The FDA has requested more safety data -- not another clinical trial -- leaving open the possibility of approval next year. For the unprofitable drugmaker, this could mean Qnexa sales of about $500 million by 2015.

The rejection was anticipated as the FDA has been tougher on such treatments after Wyeth's fen-phen fiasco in 1997, approving only one such drug since then. In addition, the agency recently asked Abbott (ABT) to withdraw its weight-loss drug Meridia, and rejected the diet drug lorcaserin from Vivus rival Arena (ARNA). In July, an FDA advisory panel voted 10-6 against approval of Qnexa.

But while the FDA stated in its complete response letter to Arena that additional clinical studies may be required, the agency only asked Vivus to evaluate the potential effects of the drug on fetus development and create a plan to mitigate such risk in women with childbearing potential. In addition, the FDA asked the company to provide evidence that the elevation in heart rate associated with the once-daily pill does not increase the risk for major adverse cardiovascular events.

Finally, the FDA requested that the Mountain View, Calif.-based company formally submit results from the already completed one- and two-year studies.

Investors and analysts see the FDA's letter and requests more as potholes on the road to clearance, rather than the red light faced by Arena's lorcaserin, which is also seen as the least effective of the three competing drugs. Even the FDA advisory panel conceded that Qnexa resulted in significant weight loss. In its 56-week study, Qnexa helped severely obese people lose an average of nearly 15% of their body weight.

"We remain confident in the efficacy and safety profile of Qnexa demonstrated in the clinical development program," said Vivus CEO Leland Wilson, adding the company plans to respond within six weeks.

And even as the FDA continues its cautionary approach, public health officials stress the need for an even modestly effective weight-loss drug as Americans get fatter and obesity costs the U.S. as much as $147 billion annually in health care, according to a 2009 study from nonprofit RTI International and the Centers for Disease Control and Prevention.

Shares of Arena and Orexigen (OREX) also got a boost from the latest FDA response. Orexigen's Contrave faces an FDA advisory panel in December.

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The relatively benign CRL for Qnexa is not really surprising. VVUS is an FDA/Wall St./media darling. David Orloff had been promoting the concept of combination therapies since at least 2004 while he was still at the FDA. When he suddenly resigned from the FDA in the middle of controversy over questionable drug approvals in his office, he was fortunate to get a job at Medpace. While at Medpace, Dr. Orloff oversaw clinical trials of Qnexa and “crafted” the Qnexa NDA, which was reviewed at the FDA by Eric Colman, the person who Orloff had supervised and worked closely with while at the FDA. The fact that Qnexa does not meet the requirements for combination therapies based on the component efficacies does not matter. The fact that the advisory committee panel requested additional clinical trials for cardiovascular concerns does not matter. The fact that topiramate causes cognitive problems and birth defects does not matter. This drug was a foregone decision that has been in the works at FDA since at least 2004, where it was discussed by the theraputics subcommittee at the FDA obesity working group. An FDA official tainted by scandal, leaving to test a drug already being discussed by FDA, and submitting the application for approval back to the same office where he worked, for review by his former associate, reeks of cronyism. Cheers to your good news today VVUS shareholders! Qnexa will be approved soon, but as a citizen I am sadly disappointed in our FDA drug approval process. Deal making is a part of life. Que sera sera. This is not the first time a hopefully objective function of government is drenched in cronyism. The outrage one experiences then becomes a function of whether you benefit or suffer from the cronyism. The real test of Qnexa will be when it hits the market. The cognitive side effects of topiramate will be more of a problem than birth defects associated with the drug. Confusion and memory loss may be an acceptable price to pay for epileptics when the alternative is seizures, maybe not for obesity treatment. Hopefully alternatives will soon available to treat obesity without the very real mental confusion known to be caused by topiramate, and also shown to occur during Qnexa clinical trials.

October 29 2010 at 1:25 PM Report abuse rate up rate down Reply